Japan Outsources Data Center Work to China

There's an advantage to the Chinese being able to read the Japanese characters...most of them anyway.

One of Japan's leading temporary staffing agencies, Tempstaff Co., has opened a data center in China. When all is said and done, 220 people will be working for Japan at the new place in Suzhou.

Tempstaff workers in Japan will scan documents - surveys, applications - and send them to China for input.

The 220 workers are expected to be able to input 200,000 - 300,000 items per day once they learn the ropes.

China's data entry workers can work for 60-70% less than their counterparts in Japan.

And THAT is why companies outsource.

印度外包转移中国

When Infosys Technologies began scouting for an alternative to India as a source of unlimited, low-cost human resources, the fast-growing company came up with one answer: its home country's archrival, China.

Infosys, the Bangalore-based software services company, and other top Indian outsourcing rivals, including Tata Consultancy Services and Wipro Technologies, are doing application development and maintenance work in China as they grow rapidly to keep up with booming demand from the West for their services.

And they are quickly concluding that only China has a worker base equal to India's in terms of cost, quality and scale. Expansion there also offers the ability to cater to & and possibly garner more of & the local and regional markets, including Japan.

According to a KPMG study for the National Association of Software and Services Companies, or Nasscom, an industry trade group in India, the country will face an acute shortage of technical employees by 2009, falling short by about 250,000 workers.

"We need a deep reservoir of talent, as well as an alternative low-cost center like India as we continue to grow," said Nandan Nilekani, chief executive of Infosys. "And only China can match up."

In the quarter that ended in September, Infosys alone added more than 5,000 employees, for a total of nearly 33,000. And Wipro added 5,500 employees, reaching more than 36,000.

"China will soon be competing with India as an outsourcing destination," said Singapore-based Girija Pande, director for Asia Pacific of Tata Consultancy, India's top software services exporter.

EPO to keep the Indian BPO story rolling

NEW DELHI: India's engineering process outsourcing (EPO) business would grow 10-fold over the next seven years to touch $30 billion and make the country a major hub in this area, says a study released on Friday.

"The estimated demand for engineering process outsourcing to India has grown at 30-35 per cent since 2004-06," said the study released here by Commerce Minister Kamal Nath, adding the momentum would be sustained in the ensuing years.

The global EPO market, on the other hand, will grow to around $110-$140 billion by 2015, taking India's share to 20-27 percent, said the study conducted by the state-run Engineering Export Promotion Council (EEPC).

According to EEPC chairman Rakesh Shah, engineering exports from India touched $26 billion in 2006-07 but expressed concern over the decision to do away with the duty entitlement passbook scheme, an export incentive programme, next year.

But Kamal Nath assured that the government was working to develop an alternative duty neutralisation scheme that would replace the current scheme to be in tune with the norms set by the World Trade Organisation.

The minister asked the engineering exporters to use the focus market scheme to their advantage in promoting exports to the identified markets, especially to the Commonwealth of Independent States (CIS).

As many as 16 new destinations, including CIS, had been included this year in the focus market list and exporters will find it useful to concentrate on developing the markets in these countries, Kamal Nath added.

"Indian exports including engineering exports are likely to face increased non-tariff barriers, considering that average tariffs for industrial products in all countries is headed southwards," he warned.

"This process has already begun for engineering products and is likely to gain greater momentum as India's share in the world exports increases in the coming years."

Effort BPO to set up call centre in China

Mumbai based domestic call centre Effort BPO Ltd on Wednesday announced that the company has entered into a joint venture with China-based firm Asia Star and Hong Kong based Triple Three to establish a domestic call centre in China. The three partners will initially invest $1 million and will increase this to $ 6 million over a period of two years.

“Effort BPO will be holding 51% equity stake while Asia Star will own 24% and Triple Three 25%,” said Akshay Chabra, MD of Effort BPO.

The new venture will target about 1,000 seats and will take over Asia Star’s call centre business in Shanghai. The partners are looking at raising the employee strength to over 5000 over a period of three years. Triple Three will contribute its expertise in the financial, administrative and local understanding of the Chinese market. The JV will also add new facilities in the special economic zones (SEZs) in China, apart from the present one in Shanghai.

“With the present facilities in Delhi, Indore, Pune and Mumbai and with a total of 1,045 employees, Effort BPO plans to add 2,000 seats in Mumbai and Delhi and would target around 6,000 seats by March, 2009,” said Chabra.

He further revealed, “Apart from China the company is also looking at setting up a call centre facility in Vietnam and is scouting for partners for the JV. Moreover, we also have plans to go public in 2009,” he added.

Global BPO biz may slow to 2% growth

CHENNAI: Global business process outsourcing sector is likely to see only a modest growth of 2% in 2007, after growing at a compounded annual rate of 14% during the last five years, going by some of the recent indicators, according to a senior industry observer.

Mr Indraneel Banerjee, project director, Technology Partners International, a sourcing advisory firm, said the first quarter of 2007 saw the lowest number of contracts signed since the first quarter of 2003. The contract value was also the lowest since the third quarter of 2002.

There was also a shift away from large multi-process BPO agreements to single function contracts of a smaller size, he said. He was speaking at a seminar “The Changing BPO Landscape: Can India become a knowledge services hub?” organised by Nasscom on Wednesday in Chennai.

While TPI saw a softening of growth in BPO globally, it was positive about the potential of knowledge services outsourcing in India. Mr Banerjee said, “Contrary to the first wave of outsourcing, which was based on data transactions, the focus now is adding business value to a client, to enable their entry into new markets. Innovation is the key factor in knowledge-centric outsourcing”

Mr Lakshmi Narayanan, chairman, Nasscom, and vice-chairman, Cognizant Technology Solutions said that often BPO companies move up the value-chain driven by demand that comes from customers. In response, they build the capabilities to service those demands. BPOs also move up the value-chain by proactively coming up with solutions.

In a customer-driven model, pricing is usually based on (full time employees) dedicated to the project. In the competence-driven model, BPOs had a greater flexibility in pricing. Here, pricing could be based on the value added to the business, he said.

The seminar witnessed participation from offshoring companies like HP BPO, Ajuba Solutions India, Scope International and Pangea3 Legal Database Systems. The speakers contended that though the KPOs offer immense potential for India in the out-sourcing industry, this innovation-driven model would require a high degree of investment in domain and process capability and also employees with specialised skill-sets.

Also, the pricing model would move from being resource-based to value-based. The KPO sector also faces challenges like security, innovation and attrition. Security was especially a matter for concern among players in healthcare and the legal outsourcing arena.

Mr Devendra Saharia, president, Ajuba Solutions said, “Apart from financial data, we also deal with patient details, which is highly sensitive. In healthcare, R & D productivity is the key rather than the earlier phase where it was only claims processing.”

Nasscom has chalked out initiatives to help IT/ITES tackle. Mr Lakshmi Narayanan said, “We encourage educational institutions and industries to develop a finishing school-oriented programme. Apart from encouraging entrepreneurial activity, this would also act as an effective interface between the academia and industry.”